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Political Economy of Economic Development in India 1950 to 1964 The Nehru era 1965 to the early 1980s The Indira Gandhi era 1980s onwards

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Political Economy of Economic Development in India 1950 to 1964 The Nehru era 1965 to the early 1980s The Indira Gandhi era 1980s onwards Statist model of Development: Import Substitution-led Industrialization

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In this Lecture 1950 to 1964 The Nehru era 1965 to the early 1980s The Indira Gandhi era Statist model of Development: Import Substitution-led Industrialization

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Statist model of Development What was this model of development? Why was it adopted? What was its impact? How did it vary under Nehru vs. Indira Gandhi?

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The Statist Model of Development Import Substitution-led Industrialization The Leading Role of the State Emphasis on self-sufficiency Substituting imports to minimize foreign dependence Priority to heavy industry Neglect of agriculture Focus on higher education

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The Statist Model of Development Nehru’s nationalist and socialist leanings Suspicion of an open economy

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The Statist Model of Development Nehru’s nationalist and socialist leanings Suspicion of an open economy Resistance to foreign investors Protectionism Preference for heavy industry

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The Statist Model of Development Nehru’s nationalist and socialist leanings Suspicion of an open economy Resistance to foreign investors Protectionism Preference for heavy industry Serving the interests of Nation-building

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Ideological proclivities + Interests

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Economic elitePolitical elite

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What was the Impact of the Statist Model of Development? Mixed Results

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On the negative side Overall rates of economic growth were sluggish Inefficient economy Neglect of Agriculture Neglect of Social Development

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On the positive side Industrial growth was respectable Retained Goal of Self-Sufficiency

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Indira Gandhi Years India's democracy became more populist and deinstitutionalised, economic rhetoric moved far to the left, the gap between the state’s developmental capacities and economic goals widened even further, to the detriment of industrial development

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Indira Gandhi Years Nehru’s statist model of economic development essentially continued without any major changes. Two main changes: a major shift in agricultural policy that had a benign long term impact on food production and a variety of left-leaning changes that reflected Mrs Gandhi's political calculus that helped neither economic growth nor redistribution.